EU regulation barrier to Asian Infrastructure Investment, says panel

A panel of infrastructure finance experts at the City of London Green Finance Summit this week said that a key barrier to European investment in emerging market infrastructure lay in EU Solvency II requirements.

Speaking at panel on financing Smart Cities, HSBC’s Rongrong Huo, Co-Head of Sustainable Finance Unit, discussed how emerging market infrastructure and institutional investment funds could be better matched. Insurance companies in Europe however are required to hold regulatory capital against insolvency that could inhibit such investments.

James Kenny, Head of Global Affairs at Arup – a corporate member of Asia House – pointed to the need to unlock infrastructure as an investable asset class to enable greater private sector participation in the sector.

On a panel on the role of the institutional investor, Veronica Leroy, Head of Infrastructure Services at Aviva Investors said that the insurer had committed £500m per year to infrastructure investment in developed economies in Europe and the US. Emerging market infrastructure is considered higher risk by institutional investors as it often attracts a lower credit rating.

The Green Finance conference, attended by 700 environmental investment professionals, was held as news of US President Trump’s withdrawal from the Paris accord broke, creating a palpable collective sigh across the Guildhall.